Jess McCabe

Supply chain problems halved the number of homes Southern Housing Group completed this year, in one of the first concrete signs of the nationwide problem affecting delivery by housing associations.

Southern completed only 197 homes in the 2017/18 financial year. This is roughly half its output for the previous year, when it handed over 393, and even further below the 494 it expected to complete.

The 28,000-home association focuses on London and the South East and has a target of 500 homes a year, which is meant to be ramping up to 800 homes a year.

Alan Townshend, development director at Southern, said the reason for the underperformance was “predominantly supply chain issues”.

He added: “We had six schemes that were late. And every time I go out on site it’s the same problem usually – there’s a lack of labour.”

He added: “The biggest challenge we face is actually who is going to build these homes.”

Brexit is already having an impact, Mr Townshend said, although the full effects probably won’t be felt for another 18 months.

“Some European labour didn’t come back into the UK after last Christmas,” he said, based on conversations with Southern’s contractors and house builders. This added to an existing, well-known problem of construction workers leaving the industry at a higher rate than they are being replaced.

Paul Hackett, chief executive of Optivo and chair of the G15, said this was an issue being experienced across London

He said: “We are on track with our delivery. But we are experiencing more problems with the supply chain and that’s largely around our contractors and sub-contractors having trouble retaining skilled workers, especially in London. It’s a combination of an ageing and retiring workforce, a weak pound, and yes, the Brexit vote.

“Across the G15 we have a commitment to build 42,000 homes by 2021. There’s still a high degree of confidence we will achieve this.”

The industry needs to recruit 157,000 construction workers by 2021 to keep up with demand, according to the Chartered Institute of Building, while government statistics show the UK construction industry’s output declined 3.4% from February to April 2018.

About 8% of UK construction workers are from elsewhere in the EU, according to the Federation of Master Builders.

Southern has started to take action to address how this problem is affecting its delivery, setting up its own construction company. However its first project, of 33 homes on the site of a former pub, won’t be completed until the end of next year.

Southern has also set up a framework for housebuilding contractors, with the aim of signing them up for future projects as well as those currently under construction. Mr Townshend said he hoped this would help to build a better relationship and a more “strategic partnership” with contractors, incentivising them to prioritise Southern’s jobs.

Mr Townshend is due to take over as chief executive of Southern later this summer, when Tom Dacey retires.